Tribunal rules depreciation starts on EOU capital goods installation. Pre-deposit waived. Duty demand and penalty set aside.

The Tribunal ruled in favor of the applicants, holding that depreciation commences when capital goods are put into the manufacturing process in a 100% EOU. It waived the pre-deposit of duty and penalty pending appeal based on Circular No. 27/98. The duty demand of Rs. 48,08,428 and penalty of Rs. 5 lakhs imposed by the Commissioner of Central Excise were set aside.

---

---

The Commissioner of Central Excise confirmed duty demand of Rs. 48,08,428 and imposed a penalty of Rs. 5 lakhs on the applicants for allegedly claiming excess depreciation. The issue was determining the date of commencement of commercial production for calculating depreciation. The Tribunal waived pre-deposit of duty and penalty pending appeal based on Circular No. 27/98 stating depreciation starts when capital goods are put into manufacturing process in 100% EOU.

---